How unethical behaviour spreads through a company’s social network Friday, 9 December 2016

Unethical behaviour in an organisation, such as fraud or manipulation, can affect everyone in the social network around the perpetrator. As a result, feelings of revenge or vindication can turn victims into new perpetrators, and observers may follow the example of the original perpetrator. That’s why companies should look beyond punishing the perpetrators if they want to prevent such behaviour. They should also consider healing and repairing the company’s social network, argues researcher Franziska Zuber of Rotterdam School of Management, Erasmus University (RSM) in her PhD thesis.

Zuber, partially driven by her previous work as a consultant in fraud investigation, started to research her observation that in many cases, unethical behaviour in organisations does not happen in isolation but is often spread across individuals. For one of her studies, she decided to analyse such acts not only from an individual’s perspective, but also through the lens of a ‘dynamic social network analysis’.

Dynamic social networks

Dynamic social networks describe how individuals are connected to each other, and how they change the network over time by interacting with each other, for example by adding new connections. Individuals – the nodes in the network – can be thought of as connected to their actions as well as to other individuals. Over time, they change their relationships with others as well as their relationships with actions. This video shows a dynamic social network and the behaviour of people in the network.

Video content: https://www.youtube.com/watch?v=PV-PQa0p2FM

Business ethics

When applied to business ethics, this analytical framework shows there are consequences for the organisation’s social network when an unethical transgression is committed or exposed. There is a perpetrator, there can be victims and observers, and finding yourself in one of those roles can also change how you interact with others – leading to change in the entire network. That’s why the reverberations of unethical behaviour – throughout an organisation – often last a long time, says Zuber

In one of her studies, Zuber pulls together earlier research of unethical behaviour in organisations to chart the ways that unethical behaviour can spread through an organisation’s social network. She describes how perpetrators, victims and observers react to unethical behaviour, how existing social relationships affect how people react, how people change their social relationships as a result, and how these processes can lead to new unwanted acts – in other words, how unethical behaviour spreads.

Perpetrators: looking down on the victim

Zuber describes how an initial unethical act sours relationships between perpetrators and victims. This negative relationship then makes it easier psychologically for perpetrators to believe the victim ‘deserved it’, and makes it more likely that the perpetrator will commit more unethical acts: they don’t feel any empathy with others because there’s already a negative relationship between them.

Victims: direct and indirect retaliation

There’s a similar chain of action and reaction for victims, the researcher describes. For example, someone sexually harassed by their manager may retaliate directly against them. But if that manager is too powerful, or out of reach in the social network, the victim might resort to stealing office supplies to inflict indirect harm on the manager and their stationery budget. In this example, one type of unethical behaviour – sexual harassment – leads to another type of unethical behaviour – stealing supplies – and the new unethical behaviour may be observed and imitated by the victim’s colleagues.

Justice served

Zuber also notes how employees can sometimes feel victimised even when someone else was the target of unethical behaviour. This also holds true if the organisation itself has been harmed. Such victims might then decide they want to see ‘justice served’ and retaliate against somebody else in the social network.

At a first glance, it may seem that an unethical transgression is a new and isolated incident. The network approach that Zuber proposes can help management or compliance officers understand that it’s often an act of unethical behaviour with a history that includes other acts, perhaps of a different kind, says Zuber.

Observers: imitation or retaliation

An act of unethical behaviour often means other people find themselves in the role of observers, Zuber notes. Observers who occupy a similar role in the social network and face a similar situation could copy the behaviour they have observed in the original perpetrator. Interestingly, this could also lead to another type of unwanted behaviour. This happens when observers have a different position to the perpetrator, and can choose different options for their action.

By contrast, when the observer has a positive social relationship to the victim, for example when they are a friend of the victim, they may feel the same kind of anger as the victim and retaliate against the perpetrator too.

Avoiding the spread of unethical behaviour

Importantly, Zuber says, not every victim or observer automatically turns into a new perpetrator. How they react to unethical behaviour also depends on systems in place in the organisation. If the victim is confident that managers will take disciplinary action against the perpetrator, they will not try to punish the perpetrator by retaliating. Likewise, observers who see the perpetrator punished are less likely to behave in the same way as the perpetrator.

While disciplinary systems against offending employees are common, organisations often forget about the negative social relationships that result from such offences. Punishing perpetrators does not repair networks damaged in this way. To avoid long-term negative consequences of social relationships damaged by unethical behaviour, managers and compliance officers also should think about repairing social relationships and rebuilding trust among perpetrators, victims and observers as appropriate, depending on the seriousness of the offence.

Damage to social relationships

Looking at the spread of unethical behaviour through the lens of dynamic social networks shows that the most effective compliance management relies on understanding social relationships and interactions in the organisation. It considers not only the financial and reputational damage from unethical behaviour, but also the damage caused to social relationships.

Rotterdam School of Management, Erasmus University (RSM) is one of Europe’s top 10 research-based business schools. RSM provides ground-breaking research and education furthering excellence in all aspects of management and is based in the international port city of Rotterdam – a vital nexus of business, logistics and trade. RSM’s primary focus is on developing business leaders with international careers who carry their innovative mindset into a sustainable future thanks to a first-class range of bachelor, master, MBA, PhD and executive programmes. Study information and activities for future students, executives and alumni are also organised from the RSM office in Chengdu, China. www.rsm.nl

For more information about RSM or this release, please contact Ramses Singeling, Media Officer for RSM, on +31 10 408 2028, or by email at singeling@rsm.nl.